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An Analysis of Practice Directions on Tax Disputes Determination Issued by the Federal High Court

Recently, the Chief Judge (CJ) of the Federal High Court (FHC) issued the Federal High Court (Federal Inland Revenue Service) Practice Directions, 2021 (the Directions) in respect of tax matters and applications filed by the Federal Inland Revenue Service (FIRS).  The Directions, amongst other objectives, seek to facilitate the speedy dispensation of justice relating to tax matters. The Directions is dated 31st of May 2021 and is effective from 1st of June 2021.

Major Highlights of the Directions

The Directions were issued by the CJ of the FHC in the exercise of his powers under Order 57, Rule 3 of the FHC Civil Procedure Rules.  They seek to ensure the effective management of tax cases and timely determination of tax-related matters, provide directions on applications from the FIRS and promote the use of electronic filing and service systems in tax-related matters.

Some highlights of the Directions are as follows:

  • A judge to whom a tax-related case has been assigned is required to accord priority to the case.
  • The FIRS may make an ex parte application for an interim Order of forfeiture of the taxpayer’s property or the freezing of the taxpayer’s account.
  • The Directions also provides that the FIRS may apply for an ex parte Order of the FHC to seal the taxpayer’s premises where the taxpayer refuses to grant access to the FIRS or access the taxpayer’s books, documents, servers or bank accounts. It also provides that the FIRS shall, after an Order of interim forfeiture has been made, file a motion on notice within 14 days after the service of the Order on the taxpayer, seeking to make the interim Order absolute.
  • A taxpayer who intends to oppose FIRS’ application for an Order absolute is required to file a counter-affidavit and a written address within 14 days of the service of the application to him; otherwise, the taxpayer is required to pay the tax liability into a designated account.
  • A taxpayer who intends to contest the Notice of Assessment served on him is required by the Directions to pay half of the assessed amount in an interest yielding account of the FHC, pending the determination of the application.
  • Electronic service of court processes via WhatsApp or e-mail is acceptable, and a printout of the WhatsApp message or e-mail shall be sufficient proof of service.


  • Although the overall objective of the Directions, which is to facilitate the speedy dispensation of justice in tax and tax-related matters, is commendable, the Directions is contained with provisions that are at variance with extant tax laws, particularly the FIRS Establishment Act (FIRSEA) and the Companies Income Tax Act (CITA). For example, the Directions make provision for the interim forfeiture of the immovable property of a taxpayer upon an application by the FIRS and for the freezing of the taxpayer’s bank accounts. However, it is important to note that neither CITA nor the FIRSEA allows the FIRS to bring an application for the interim forfeiture of the taxpayer’s property or freezing of the taxpayer’s account, whether as a prelude to filing a substantive action or for any reason. Thus, there are concerns that the foregoing provision of the Directions is not valid since it is not based on any of the tax laws.


  • Likewise, the Directions mandate a taxpayer to pay half of the contested tax liability into an interest yielding account as a condition precedent to challenging the FIRS’ application for interim Orders, which is also not provided for in any of the tax laws.  Additionally, there are no directions as to the ultimate beneficiary of the accrued interest on the payment made on the account; this is an area that needs to be clarified.  In any case, the requirement is at variance with the provisions of the relevant tax laws, which do not make provision for payment of half or any amount of the contested tax liability as a condition precedent to challenging a tax assessment.



  • It should be noted that Practice Directions are mere guidelines that set out the procedure to be followed in exercising rights or enforcing obligations under the substantive law. They cannot be used to make a new set of laws or extend the provisions of the enabling law as that would purely amount to law-making, which is the exclusive preserve of the National Assembly or State Houses of Assembly as the case may be.  While we note that Practice Directions have the force of law, they are subordinate to the enabling statutes and rules of court and should not be used to extend the provisions of the enabling statute. In the case of Auwalu v. the Federal Republic of Nigeria, the Supreme Court ruled that practice directions cannot be interpreted to be superior to or override the provisions of statute or rules of court.


  • The condition precedent stated above also appears to defeat the ultimate objective of the Practice Directions, which is the speedy and just administration of justice.  A condition requiring a taxpayer to pay half of the contested tax liability before challenging a tax assessment does not seem just in the circumstance given that the tax assessment is still under contest. In addition, such a requirement may discourage taxpayers from challenging assessment notices for fear of what may be seen as a punitive requirement, thereby affecting taxpayers’ access to courts and justice and ultimately impacting investors’ views about Nigeria’s investment environment regarding tax dispute resolution.



  • On another note, the wordings of the Directions seem to indicate that the FHC is the first point of recourse in the determination of tax disputes, thereby possibly limiting the jurisdiction of the Tax Appeal Tribunal in determining tax disputes. However, it is important to note that the Court of Appeal in ESSO & SNEPCO v. NNPCand in SNEPCO v. FIRS recognised the Tribunal as the first line of recourse in the adjudication of tax disputes. While the overall objective of the Directions may be commendable, the Directions must conform with extant provisions of the relevant tax laws to gain the required validity.




Given the concerns highlighted, taxpayers are advised to consult their tax and legal advisers to fully understand the implications of the Practice Directions on any dispute with tax authorities and the steps necessary to take in that regard to minimise or avoid exposure.


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